While the GBP/USD ended yesterday’s trading day virtually unchanged, leaving us without any sustained profit, the EUR/USD climbed towards 1.1870 and provided some profit for euro bulls.
The European Central Bank’s new strategy of allowing inflation to overshoot the ECB’s 2 percent target for a while points to a more expansionary bias for monetary policy. The new formulation of “2 percent inflation target is not a ceiling” gives the central bank room to run accommodative monetary policy for longer. While the new symmetric inflation target can be perceived as a dovish disposition, the euro gained after the announcement.
Elsewhere, the DAX experienced a sharp drop towards 15300. We saw the index breaking below the ascending trendline at 15450, as well as below the recent sideways trading range.
The next support is seen at 15280 and if the DAX is unable to overcome the 15500-Level, we may see a drop below that support with a next lower target at 15100.
Beautiful weekend everyone.
Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28.
We will take our annual summer trading break from August 2 to August 20 but will adjust risk exposure even in the month of July.
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